Rising vegetable oil stocks in China put pressure on prices
Commercial inventories of China’s three major vegetable oils continue to rise, putting pressure on domestic spot and futures prices. As of August 21, combined stocks reached 2.55 mln tons, according to China’s National Grain and Material Reserve Data Center.
Inventories increased by 60 thsd tons week-on-week, 120 thsd tons month-on-month and 140 thsd tons year-on-year. They were also 370 thsd tons above the three-year average for the same period.
Rapeseed oil remains under pressure from ample supplies and high inventories, weighing on both spot and futures prices. SunSirs sees the inventory situation as bearish for the market.
Soybean oil is facing a similarly loose supply-demand balance, limiting support for prices. Palm oil is also under pressure from abundant supplies, making a significant short-term price increase less likely.
Overall, rising stocks of soybean, rapeseed and palm oils are creating a bearish environment for China’s vegetable oil market. As long as inventories remain elevated, the potential for a significant price recovery is expected to remain limited.
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